By Allen Espejo
Is it really luck that brings abundance in our life or is there more to it?
I personally don’t believe in good luck. I prefer to call them blessings. Sometimes, blessings come in the most unexpected ways. But when blessings do come around, are you prepared for it?
Blessings come in many ways – good health, great relationships or perhaps a financial windfall. Financial windfall may sound the simplest, but in fact, it is as equally complicated than the rest. Keep this phrase in mind – money doesn’t grow on trees – but at times it might seem as if it does.
Do you know what you would do if you suddenly received a substantial amount of money? For instance, Canadians love it when they get a huge fat tax-refund! From the results of a survey done in 2014, no fewer than one-third would use it to either pay down debt or make investments.
Things might be different, however, in the case of a financial windfall that is unexpected and more substantial. For example:
- A lottery jackpot;
- An appreciable gain on the sale of property;
- A substantial insurance benefit.
In these cases, considering what to do could take more time, be more complicated and, very likely, require the help of a qualified advisor. Here are the kinds of questions you should be prepared to discuss:
1. How about splurging on something?
Great idea! But don’t get too excited yet! I suggest to read my full article first.
2. Is the money you received taxable?
Very few kinds of income are free of income tax. In Canada, there’s none on life insurance benefits or lottery wins. But, almost all other kinds of income or gains that might fall into your lap will be taxable. Different rules apply to different kinds of income.
3. Is there a catch?
Your grandfather died and left you a bunch of money plus his second home? Watch out, because his estate could also include debts and taxes that come due to his death. The gift might not be quite what you expected.
4. What is the money intended for in the first place?
A life insurance benefit works on the principle that the capital will generate an income for the survivors for a number of years. You don’t buy an $85,000 sports car from a $100,000 life insurance proceeds.
5. How are you doing financially?
A windfall could allow you to get your financial situation under control: for instance, pay off credit cards, or reduce your mortgage or increase your cash flow.
6. Repay or invest?
On the other hand, you might want to run some numbers. If you have a mortgage at a very low rate, you could look at investing the windfall to aim for a higher return instead of paying off the mortgage more quickly.
7. And of course, for the most favorable of all, what about splurging on something?
Here we are, back where we started! Stabilizing your situation has probably always been the best idea, but you might be able to reconcile that with some more stimulating ideas: upgrading a house, replacing your car, taking unpaid leave or starting a business.
Because in the end, even if the income is unexpected, the future can be planned!
More than a decade ago, I did not know how these things work. I thought money grew on trees!
When I lost all the material things I had, I thought all my blessings were taken away from me by God, where in fact, it was my fault because I didn’t know how to manage the abundance given to me.
After a while, I realized my failures and mistakes in life and learned to acknowledge them. I finally understood why God allowed me to fail: so He can teach me how to manage the abundance of blessings that are all intended for me and to the people around me. Failure purifies us. We become persistent. Persistence becomes faith. Faith becomes our virtue. That is a blessing!
Alteamor “Allen” Espejo lives in Burnaby, BC where he is a Life Licensed Qualified Practitioner of the Insurance Council of BC, a licensed mutual fund advisor in the Province of BC and a Manager at Desjardins Financial Security Independent Network. He is an author of a book entitled, “Can Faith and Money Mix?” His book is intended to share his views whether spirituality and money can mix — providing several ways on how to handle our finances with a faith perspective.